Zim drifts towards 2008 meltdown

HARARE – Zimbabwe is drifting towards an economic crisis as severe as the 2008 economic meltdown which eventually led government to abandon the worthless Zimdollar after it was severely dented by hyperinflation, analysts contend.

Banks are so short of cash that queuing has become a full-time occupation for some of those lucky enough to have jobs. But the amount of cash the banks are giving out each day is as low as $50.

President Robert Mugabe’s government insists the economy is foundering because of sanctions imposed by Western powers he claims are trying to oust him for seizing thousands of white-owned farms and redistributing the land to black Zimbabweans.

Mugabe’s critics, such as opposition leader Morgan Tsvangirai, say that it is in fact his policies that have ruined Zimbabwe.

Analysts said the situation looks dangerous — as it could get worse than the 2008 crisis.

As the economy continues to implode, unemployment skyrocketing and government struggling to pay public sector workers, political tensions and anti-government protests are on the increase as demonstrators accuse the government of mismanagement and corruption.

Some are calling for Mugabe, 93 — who has led the country since its independence from Britain in 1980 — to step down.

Economist and opposition legislator Eddie Cross said the country’s current cash crisis, which has escalated to a point where banks cannot pay out clients more than a small proportion of what is in their accounts, is a repeat of the 2008 economic meltdown.

“Coupled with the near total collapse of confidence and the impact of poor policy and governance, this is again leading us down the road we travelled in 2007 and 2008 which resulted in a near total collapse of the State and then dramatic political changes. It will be no different this time,” he said.

The liquidity squeeze has left companies unable to pay their workers in cash and foreign suppliers, driving many out of business, and added to the ranks of more than three million people who have become economic exiles.

Johns Hopkins University Applied Economics lecturer Steve Hanke said the introduction of bond notes late last year accelerated Zimbabwe’s path to economic failure.

“The economy is in what could turn into a death spiral,” he said.

Commentator Dewa Mavhinga said the state of the economy creates a conducive environment for people to rally together to demand government accountability and better governance.

“The solution to the Zimbabwe crisis lies in people uniting and so far, what stands between the people and positive change is needless divisions along narrow partisan lines.

“One could say Mugabe and his government have managed to rule for so long because they have been so good at divide and rule both with the ordinary people and also within Zanu PF itself.

“What should unite everyone is that simple desire for a better Zimbabwe where freedom and development are the currency of the day,” the Human Rights Watch senior Africa researcher said.

Commentator Tabani Moyo said the problem was that Zimbabwe’s leadership was pre-occupied with power retention at all costs, including sinking the national economy and its social services along the way.

“Our national budget is mainly on salaries. The government is likely going to print additional bond notes to pay salaries, which will fast eat into the real US dollars that are remaining and grounding the capacity for retail and trade to restock,” he said.

Political analyst Maxwell Saungweme said the economic downturn and deterioration in social conditions will force the people to push Zanu PF out of power.

“The opposition needs to be organised and coalesce and capitalise on these conditions to win the votes and change the fate of our nation,” he said.

“It won’t be long before basic commodities start to disappear from the shelves.

“There is no amount of economic crisis that can stop Zanu PF from holding an election, all they need is a gullible, compromised opposition that will participate, even as a coalition, and legitimise them.”